Original post by Shelby Livingston, businessinsurance.com

The $1.1 trillion budget deal that Congress approved Friday would delay the notoriously unpopular Cadillac tax for two years and put a repeal in reach of the congressional leaders and business groups who oppose it.

But benefits experts say delaying the excise tax until 2020 is unlikely to ease the aggressive strategies companies have put in place to avoid triggering it.

The House voted 316-113 Friday to approve the omnibus spending deal that congressional leaders unveiled earlier in the week. The Senate followed quickly with a 65-33 vote to approve the package and send it to President Barack Obama, who indicated he would not veto the measure.

Opponents of the 40% excise tax, which would be imposed on the portion of group health plan premiums that exceed $10,200 for single coverage and $27,500 for family coverage under the Patient Protection and Affordable Care Act, say the two-year delay is a major win for employers.

“The ACA relief is welcome and appreciated,” the National Retail Federation said in a statement.

The delay is “the first step toward full repeal,” the Alliance to Fight the 40, a lobbying group opposed to the tax, said in a statement.

For Victoria Nolan, risk and benefits manager for Hillsboro, Oregon-based Clean Water Services, a water resources management utility, the delay would “provide more breathing room to look at what additional things can be done to keep under the Cadillac tax in the future.”

Others say postponing the excise tax signals a repeal is on the way.

“We see the two-year delay as a down payment on a full repeal,” said Katy Spangler, senior vice president of health policy at the Washington-based American Benefits Council, which has backed repealing the tax on behalf of the hundreds of large employers it represents.

“If we keep the pressure on Congress, the delay may help us move toward” a repeal, American Benefits Council President James Klein said.

Geoffrey Manville, principal of government relations at Mercer L.L.C. in Washington, said the congressional vote “really increases the odds that this tax will not go into effect,” but he added the final decision would come down to “the next Congress and the next president.”

The odds for a repeal are “better than even,” he said.

While delaying the tax gives employers more time to find ways to reduce their exposure, it’s unlikely to halt much of the aggressive cost-management strategies employers have already set in motion to avoid triggering the tax, sources said.

“The majority of employers will continue down that road like they have been before the excise tax — whether or not it’s delayed or repealed,” said Steve Wojcik, vice president of public policy with Washington-based National Business Group on Health, of many employers’ shift to high-deductible health plans. “As long as overall spending for health care continues to climb faster than general inflation, there’s going to be this pressure.”

Seventy-two percent of employers expect at least one of their benefit plans to hit the excise tax in 2020 if they don’t control costs, according to an NBGH survey in August. Mr. Wojcik said that number could potentially be reduced with the delay.

Delaying the tax also does nothing to fix ongoing cost increases squeezing employers’ benefits plans, prompting them to shift more costs to workers, sources said.

Employers saw group health plan costs rise 3.8% in 2015 to an average $11,635 per employee, according to Mercer.

Supporters of the excise tax see it as a way to slow U.S. heath care spending, which the U.S. Centers for Medicare and Medicaid Services said topped $3 trillion in 2014.

According to the bipartisan nonprofit Committee for a Responsible Federal Budget, delaying the Cadillac tax until 2020 would cost the government $16 billion. Repealing it would cost $91.1 billion over the next 10 years, the committee said last week.

In addition to the two-year delay Congress passed Friday, the omnibus budget bill also calls for a study by the U.S. comptroller general and the National Association of Insurance Commissioners of whether the ACA uses “suitable” benchmarks to determine if the tax should be adjusted to reflect age and gender factors in setting the excise tax thresholds.

Still, the delay means Clean Water Services has more time before it might need to reduce the amount workers are allowed to contribute to their flexible spending accounts, a strategy the company is considering because pretax contributions to FSAs — as well as health savings accounts and health reimbursement arrangements — would be included in the excise tax calculation, Ms. Nolan said.

But a full repeal of the Cadillac tax would eliminate the company’s need to reduce the FSA limit on contributions altogether, she said.